OKLAHOMA CITY (AP) - Chesapeake Energy Corp. is selling the vast portion of its land and infrastructure in west Texas for nearly $7 billion as the company unloads debt and shifts more of its focus to drilling for oil, rather than natural gas.
The assets in the oil and gas-rich Permian Basin are being sold in a series of deals to Royal Dutch Shell PLC, and Chevron Corp., and in a previously announced sale to affiliates of EnerVest Ltd.
Chesapeake is struggling under an enormous debt load accumulated in a rush to acquire land and other assets in recent years as new technology gave drillers access to enormous reserves of natural gas held in shale and other formations under several U.S. states.
Chesapeake and other drillers found and developed so much new natural gas that the price collapsed, decimating profits - and the ability to pay down debt.
The Oklahoma City company is trying to wipe $14 billion in debt off its books this year and the sale, announced Wednesday, brings it close to achieving that goal, the company said. Assets sales now total $11.6 billion for the year.
"These transactions are significant steps in the transformation of our company's asset base to a more balanced portfolio among oil, natural gas liquids and natural gas resources," said CEO Aubrey McClendon.
Analysts said Chesapeake received what appears to be a very good price for its infrastructure assets. But they said the $3.3 billion price for the Permian Basin land assets sold to Shell and Chevron was less than the $4 billion to $5 billion Chesapeake had expected to fetch. The company may have to sell more assets than it expected, or cut back drilling operations elsewhere.